Libertarian Billionaire Peter Thiel Supports Raising the Minimum Wage

The prevailing thinking is that conservative Republicans are against raising the minimum wage. However, that is not true for all conservative Republicans.

Certainly not for Peter Thiel, the billionaire venture capitalist who co-founded PayPal. Thiel recently said in an interview that he supports a California ballot initiative to raise the minimum wage by fellow conservative Ron Unz. The ballot initiative would raise California’s minimum wage to $12 an hour in 2016. Thiel told the San Francisco Chronicle that he’s against raising the minimum wage “in theory,” but in practice he thinks “the alternative to higher minimum wage is that people simply end up going on welfare.” He thinks that raising the minimum wage should be considered “seriously.”

Thiel is a billionaire who, although he identifies as a conservative Libertarian, has given much money to Republican causes. These include $1 million to Club for Growth, an anti-tax group that Politico describes as “tea party aligned,” and almost $4 million to Endorse Liberty PAC for Ron Paul’s 2012 presidential campaign. Thiel even gave campaign contributions to Tea Party favorite Sen. Ted Cruz of Texas in 2012, and Mitt Romney’s 2012 presidential campaign.

Thiel deviates from political lines, however, when it comes to raising the minimum wage. And so does Ron Unz, who argues what he calls the “conservative case for raising the minimum wage,” as he stated in a blog post on his website. Unz hopes that in California, “liberals and conservatives, Democrats and Republicans could come together in a bipartisan coalition to support raising our minimum wage to $12 per hour.”

Thiel and Unz are not the only conservatives calling for the minimum wage to be raised. Last month, Fox News host Bill O’Reilly called for raising the minimum wage. “The Republican Party should really wise up and stop opposing raising the minimum wage. It should be 10 bucks an hour,” O’Reilly said. “The GOP needs to stop working against working people.” Phyllis Schlafly also called for raising the minimum wage because it would “elevate many low-wage earners above the income threshold that qualifies them for benefits and should result in reduced welfare spending.”

Some companies are already paying their employees higher minimum wages. Last week, Gap, Inc. announced that it will increase the minimum hourly rate it pays American employees from $9 per hour in 2014 to $10 per hour in 2015. Just one day prior to Gap’s announcement, the Congressional Budget Office released a report about the impacts of raising the federal minimum wage. The CBO report concluded that raising the federal minimum wage to $10.10 an hour would increase the pay and family income for most minimum wage workers.

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One aspect that is overlooked in the “minimum wage” brouhaha is that a significant segment of those who stay at the minimum wage level actually make $12-$30+ an hour. That’s because, especially in states such as CA, a full minimum wage must be paid to ALL employees — including “tip” employees. Waiters, busboys, valets, hotel room cleaners, casino employees, etc. make much — often MOST — of their living off tips.

In most other states, these job categories often can be paid a reduced minimum wage — understanding that their total compensation includes tips. Not so in California.http://www.dol.gov/whd/state/tipped.htm

And because these employees make so much in tips, they will NEVER be paid more than the mandated minimum wage. Nor should they be. Most decent “tip” jobs are coveted positions. As long as many qualified people seek these job openings, no employer is going to pay higher than the required minimum wage.

For others in straight wage jobs who start out at the minimum wage, about 2/3 receive pay raises by the end of the year (assuming they work out as new employees, gaining “soft skills” that make them reliable workers). Among the 2/3 who get a pay increase that first year, the median average salary gain for such workers is 24%. The closer to full-time the entry worker is, the better the chances that they will develop skills quicker and receive raises faster. Minimum wage is seldom a permanent compensation position — except for “tip” employees and some part-timers.http://www.heritage.org/research/reports/2014/01/most-minimum-wage-jobs-lead-to-better-paying-opportunities

In California, being a waiter or casino dealer can be a surprisingly desirable job — as more and more college grads are discovering. This results in a “misallocation of labor” — overqualified people holding semi-skilled jobs (okay, dealing IS a skilled job!). This distortion also “crowds out” job opportunities for folks who normally would qualify for such employment, increasing long term unemployment among the less educated.

A higher minimum wage will only increase this distortion.

http://www.triplepundit.com Nick Aster

I believe in California it’s not a minimum wage for tipped workers but rather a minimum guaranteed wage or $8 per hour. Slightly different.

Example: If a waiter has a slow hour and makes nothing in tips, the restaurant still owes a minimum of $8. But if it’s a good hour and he makes $15 in tips the restaurant only owes the federal minimum of $2.13 per hour for tipped workers so he gets $17.13 for the hour, not $23 (8+15).

I could be wrong on the details there… but it’s not *quite* the same thing as a different minimum wage.

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